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Consumer Confidence Declines Nearly 7 Points in July: Includes Comment from Dr. Joe Webb

Press release from the issuing company

July 29, 2003 -- The Conference Board's Consumer Confidence Index, which was virtually unchanged in June, declined in July. The Index now stands at 76.6 (1985=100), down from 83.5 in June. The Expectations Index fell to 86.4 from 96.4. The Present Situation Index declined to 61.9 from 64.2. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup. The cutoff date for July’s preliminary results was July 22nd. “The rising level of unemployment and sentiment that a turnaround in labor market conditions is not around the corner have contributed to deflating consumers’ spirits this month,” says Lynn Franco, Director of The Conference Board’s Consumer Research Center. “Expectations are likely to remain weak until the job market becomes more favorable.” Consumers' assessment of current conditions was less favorable than last month. Those rating present business conditions as "bad" increased to 30.4 percent from 28.1 percent. However, those holding the opposite view increased to 16.3 percent from 14.9 percent. Consumers claiming jobs are “hard to get” rose to 33.1 percent from 31.9 percent, while those claiming jobs are “plentiful” declined to 10.5 percent from 11.2 percent. Consumers’ expectations for the next six months were less optimistic than last month. Those anticipating an improvement in business conditions fell to 20.2 percent from 23.5 percent. Consumers anticipating conditions to worsen rose to 11.5 percent from 9.2 percent. The employment outlook was also less favorable. Consumers anticipating more jobs to become available over the next six months declined to 16.8 percent from 18.9 percent, while those expecting fewer jobs increased to 19.8 percent from 16.9 percent. The proportion of consumers anticipating an increase in their incomes declined to 15.7 percent from 17.1 percent. ----- Comments from Dr. Joe Webb: "People were stunned when the Conference Board's consumer confidence index went down in July, with the main culprit being the “employment expectations” part of the index. Don't panic. Employment is a lagging indicator, and as I said in a recent column, economic data and consumer expectations do not yet show the effects of lower weekly payroll taxes and child credit refunds (just going in the mail this week). This is just one number amidst some otherwise very encouraging and optimistic news. Throughout this period of economic sluggishness, the consumer sector has been the strongest part of the economy, despite their gloomy confidence levels, primarily from employment concerns. But they’re still buying houses and appliances. There is a preponderance of evidence that things are getting better for the general economy, only because that’s what’s really happening. Believe the data, not the sentiments." Premium Access Members at WhatTheyThink.com can view more analysis in Dr. Joe Webb’s weekly column on Friday, appropriately called “Fridays with Dr. Joe”.

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